The Value of a Good Name

Research shows that workplace bullying costs American employers billions each year in absenteeism, higher health care costs, lower productivity, and unnecessary litigation.

However, the cost may be even higher in terms of reputation, especially in this age of social media.

According to the Ethics Resource Center (ERC), a non-profit center that researches high ethical standards in public and private institutions. a good name matters for many reasons, some measurable and some not. In a new report entitled, Building a Corporate Reputation of Integrity, the ERC says:

Consumers prefer to deal with a company they trust.

Employees prefer to work at a company they are proud of.

Increasingly, investors believe trustworthy, ethical companies are a safer place to put their money.

In workplace bullying situations, lawsuits generate bad publicity that can tarnish an organization’s reputation, and targets of bullying and witnesses to bullying often bad mouth their employers after they leave. Even one disgruntled employee who shares his gripes on social media can potentially inflict enormous damage to a firm’s reputation.

A 2010 survey by Deloitte found that nearly half of workers who plan to seek out a new job say they have been motivated by a loss of trust in their employer. Some 46 percent also complain about a lack of transparency in internal communications and four of ten say they have been treated unethically.

According to the ERC, corporate executives surveyed by Weber-Shandwick, a global public relations firm, estimated that 63 percent of their companies’ market value is due to reputation. A good reputation may be even more important for consumer product firms, where consumers cast verdicts on reputation with their pocketbooks, withholding business from companies they believe are ethically deficient and rewarding those with good reputation. Research by Edelman, another global PR firm, found that nearly three-quarters of consumers say they will actively avoid doing business with a company they don’t trust, while 85 percent will go out of their way to buy from a company they trust.

The ERC says ethical leadership is a key to building and sustaining a good reputation: “ERC research consistently shows employees are more likely to act with integrity when an organization’s leaders are honestly and visibly committed to ethical performance.”